Here’s a good post explaining in simple terms why renting can be better than owning.

Most important part:

So to sum up why I rent: Shares right now cost 16 times earnings and over long time periods return 7% a year after inflation. Houses right now cost 19 times their “earnings” and over long time periods return zero after inflation. And they look likely to return less than that for a while.

This piece was written from the American perspective. Not that I think they need to be educated anymore as to the pitfalls of owning property.

The Canadians though are a different story. I moved to Toronto a little over a year ago and can easily afford a house. But like the author above, I choose to rent for the exact same reason. I go to open houses all the time, but I’ve yet to see even one single property that offers an attractive rental yield. At current prices, I can generate a higher income by putting my money in the bank than by buying a house or condo.

Of course, even with an unattractive yield, I could still make the argument for buying property if I were to believe that prices were to keep going up. Except that I don’t believe. The market has turned. And while there’s plenty of pundits who tell us that we’re headed for a “balanced” market, history suggests otherwise. Bull markets are generally followed by bear markets — not balanced markets. You always need a “greater fool” to push up property prices and I suspect even fools are starting to wise up to the market’s current situation.